Electric power generation and distribution is more than a $200 billion dollar per year business. Electric utilities have traditionally been government-regulated monopolies. Utility companies come in many sizes, with some large enough to supply an entire state, while others serve only local communities. These businesses take on many forms, including corporations, co-operatively-owned utilities, and government owned utilities.
Traditionally, utilities controlled all aspects of making and delivering electricity. A traditional utility, like Duke Power for example, generated, transmitted, and distributed electric power. For instance, a single company might operate coal-fired steam generation plants, hydroelectric plants, and nuclear plants, all which covert various fuels into electricity. The same company would own transformers, power lines, switches and relays, which transmit the electricity from the generation facility to the distribution site. The company also would distribute power to homes and factories by connecting them to a power grid, supplying a meter, and billing a customer for power consumed.
Today, however, state governments are beginning to deregulate the power industry in an effort to encourage competition. As of spring 2000, all fifty states have begun to investigate competitive power markets at the retail level. In fact, eighteen states, including New York, Virginia, and California, have enacted pilot programs deregulating utility markets.
As a result of deregulation, “traditional” utility companies are shifting paradigms. For example, companies who feel that their strongest asset is generating electricity may sell their transmission and distribution assets to others. Thus, while in the past a single company provided power, today there may be a distribution company, a generation company, a transmission company, a meter reading company, and a billing company.
One problem with this “multi-faceted” power organization is that each company is dependent upon another for success. For example, if the generation company stops producing power, the entire power chain ceases to function. When the power goes out, customers can be literally left in the dark for days or weeks at a time. Recently, in Atlanta, Ga., more than 500,000 customers were without power in an ice storm for more than five days. During this time the average daytime temperature was below 15 degrees Fahrenheit.
Although some homes have local generators, these generators are usually kept on hand for emergency power outages. Configuration of local generators is usually done manually, with local generation being employed during a power outage and the utility power grid being employed once power is restored to the grid. Aside from emergency usage, local generation of electricity using small generators at the consumer's home is not currently widespread because there is no system that efficiently causes power to be supplied by a local generator when local generation is less expensive and supplied by the power grid when local generation is more expensive. For this reason, many homeowners cannot justify the investment in a generator for backup power only.
Therefore, there is a need for a system that determines optimal times to actuate alternative power devices based on economic factors such as the relative costs to generate.